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Continuing Care Retirement Community Closures:
It Can Happen Here!

By Lillian L. Hyatt, M.S.W., and a Resident of a CCRC


Excerpted from the Fall 2006 The CANHR Advocate newsletter

As a CCRC resident, I have been repeatedly assured by the 40–year–old not–for–profit corporation that owns my facility that it is financially sound and would have no difficulty fulfilling its contracted promise of quality life–long care. After reading all the information sent to me by the Continuing Care Contracts Branch (CCCB) of the Department of Social Services about a 42–year–old facility that was just closed by its Board of Directors, I began to wonder if the fate of those CCRC residents could await me. The residents’ contracts included no language covering the rights, protections, and process for closure of a CCRC (nor is there in mine). There is no legal protection for any CCRC resident in California faced with their CCRC closing.

As the story of the closure of California P.E.O. Marguerite Terrace in San Jose unfolded in newspapers, the fate of these seniors has had a chilling effect upon me. Four residents (out of sixteen in the nursing home section) died after being transferred to other Skilled Nursing Facilities and others suffered insomnia, ulcers, and diabetic attacks. No proper assessment was made as to whether these frail residents would survive the move. A Department of Health Services (DHS) Class A Citation was issued that fined the facility $20,000.

All 36 residents were offered space in the provider’s sister facility in Southern California, but only 5 responded to that offer because of strong ties to family and friends in the Bay Area. Residents in Independent Living units were offered a so–called buyout to enable them to remain in the local community in another CCRC offering comparable life–long care if they were accepted. Most CCRCs expect entering seniors to be in reasonably good health and have financial resources to cover the cost of caring for them for the rest of their lives. Because of age, health and financial status of these seniors, few were accepted to another CCRC.

Other residents were offered a buyout based upon their age, life expectancy, admission fee payment, and present level of care. A resident asked, “If they estimate your life expectancy is three years and you live for ten, what do you do for the other seven years?” For the residents in Independent Living, the buyout did not account for future level of care changes to assisted living or nursing home. One resident had entered into a contract with the CCRC in February 2006, only to be given notice in April that the facility was closing.

Four residents refused to leave when the facility was officially closed on August 12, 2006, in a “live–in” protest to poor treatment of all residents in the closure process and to the unfair buyout arrangements. They have been informed they will be evicted, a sad ending to their dream of a secure future. These women entered into an agreement at Marguerite Terrace with the promise of lifetime care, and the security of aging in place. This promise has been shattered!

The California P.E.O. CCRC closure in San Jose may not be unique. There are other CCRCs in California that are old and that are experiencing lower than necessary occupancy rates. A DSS official stated that his department had received no complaints and relied on P.E.O. administrators to report on the buyout process. “We are not involved in provider–client negotiations. That is basically a business matter between those parties.” This attitude is hardly reassuring for any senior thinking of entering into a contract with a CCRC provider.

Consumer Advice: Present and prospective consumers of Continuing Care beware! There is no adequate legal protection for any CCRC resident in California faced with their CCRC closing. Carefully review the contract dealing with refund policies and buy–out provisions for closure, and check documents dealing with the financial integrity of the provider such as audits, required Disclosure Statements and Key Indicator Reports concerning the age of the facility, occupancy rates, debt to asset ratios, unrestricted assets, and provider reserve funds (see SB 1212 Torlakson in Legislation Watch).